California’s Quiet Transportation Problems

This Thursday, a special committee of the US House of Representatives will reevaluate California’s high-speed rail project and to discuss whether it’s still a good idea. The beleaguered bullet train has been a political lightning rod in California since voters approved its construction three years ago.

But while media and policymakers fixate on high-speed rail, the bigger picture of basic transportation funding gets much less attention.

In 2003, the California Department of Transportation identified $28.5 billion in needed upgrades to the state highway system over the next five years. By 2008 (the same year voters approved high-speed rail), that figure had almost exactly doubled to $56.5 billion. In its 2010 annual report, the California Transportation Commission found that $37 billion in local road projects waited to be funded with no money in sight, expected to grow to $79 billion by 2033.
The growing list of unmet needs reveals how severely California is struggling to keep up with the most basic of repairs and upgrades for its transportation system. Maintaining and expanding that system to suit its growing population faces a number of difficulties, including local and environmental permitting issues and bureaucratic myopia. But the most formidable challenge to transportation is undoubtedly the malnourished and schizophrenic condition of its funding sources.

The state’s General Fund is staring at a $13 billion deficit through FY 2012. Although Governor Brown and various advocates have proposed a slew of tax increases to go on the November 2012 ballot, the bulk of the new money would go to education and social services, whose programs have been slashed with far greater notoriety than the beating infrastructure has taken.

Proposition 1B authorizes the state to sell $19.9 billion in bonds to finance transportation projects. But the state’s erratic budget process has persistently delayed bond sales by scaring investors and worrying fiscal watchdogs about making high interest payments. Meanwhile, $9.1 billion in sold but unused bond funds have been clogged up in the bureaucratic pipeline.

Prospects are also dimming on the federal level, where California receives roughly 20 percent of its state highway funds. A few weeks ago, President Obama signed into law a bundle of appropriations bills for the US Department of Transportation for FY 2012, obligating $39.15 billion to highways, down almost $2 billion from FY 2011. The appropriation also omits the much-talked-about National Infrastructure Bank (for which the President’s budget had requested $5 billion to start a revolving fund).

Even with these reductions, congressional budget watchers estimate the appropriations will almost fully deplete the federal Highway Trust Fund by the end of FY 2012. And there is no system in place to recharge the trust fund for the nation’s transportation funding.

Back in California, policymakers should avoid any hopes that local agencies can pick up the slack. With tax revenues down and redevelopment likely to get slashed or go extinct in January, local governments are quickly losing relevance in public works.

A potential ballot measure to raise commercial property taxes would funnel 90 percent of the extra revenues to the state. After allocating a portion of the remainder to school districts, by some estimates the increase would provide just $240 million to cities, counties and special districts that could possibly be used for public works (a less than 1-percent increase from their current revenues).

A giant problem is California’s sclerotic budget process, which makes it difficult for policymakers to adapt spending priorities to economic recession and plunging tax receipts over the last three years.

But the larger conundrum facing the country’s transportation systems is the funding methods are gradually becoming obsolete. Today, the majority of transportation funding still comes from fuel taxes. The federal fuel tax of 18.4 cents per gallon was last set in 1993, when the average new passenger car got 28.4 miles to the gallon. By 2010, the average new car was getting 33.7 miles to the gallon, according to the US Bureau of Transportation Statistics. Cars are becoming more fuel-efficient, so fuel taxes are providing less revenue.

And this trend will continue. In the years ahead, alternative and efficient fuel technology (in which California state programs invest heavily) will continue to drain fuel tax revenue. Additionally, the state’s policies for transportation planning increasingly aim at reducing per-capita vehicle miles traveled, which, in the long run, promises to further deflate revenues.

The answers to these questions seem to be a long way off, as policymakers wrestle a dozen of other competing needs in this unemployment-wracked recession. But while the eyes of Congress settle this Thursday on the budget and management of high-speed rail, ideally they will also see the forest for the trees, and take note of how dire the picture looks for California’s more basic transportation infrastructure.